4.Building reliable, competitive and diverse supply chains The case for supply chain diversification Critical minerals supply chains are geographically concentrated, leaving them fragile and vulnerable to disruption. This is a global challenge requiring international cooperation. There is growing recognition of the importance of diverse global supply chains to ensure resilience, stability, and continuity of supply. Likeminded countries are increasingly concerned about the pressure growing demand can place on critical minerals supply chains, given many are vulnerable to supply chain disruption. This was a key observation of the Sydney Energy Forum held in July 2022, with participants discussing the importance of both increasing production capacity as the world progresses the energy transformation, and improving the resilience of supply chains through diversification. Concentration in critical minerals is particularly acute at the refining and processing end of critical minerals supply chains. The importance of bolstering the diversity and resilience of supply chains for these valuable materials will heighten as demand for these products continues to grow. The United States (US)Inflation Reduction Actpassed earlier this year is an example of how other countries are working to incentivise the diversification of critical minerals supply chains. It takes action on two fronts, providing support to grow the US’ domestic processing capability while incentivising manufacturers sourcing their inputs outside established supply chains. The Australian Government’s objective in contributing to the diversification of supply chains is to make these markets stronger, more efficient, more resilient and more transparent. With world leading reserves of critical minerals, Australia could develop and expand its sector to support global diversification. More diverse supply chains can mitigate supply chain risks such as production bottlenecks and price volatility, in part caused by the material-intensity of clean energy technologies compared to fuel- intensive energy, bringing new energy and trade dynamics into play.4 We welcome comments on how Australia could contribute to supply chain diversification, moving projects downstream and supplying a more diverse range of critical mineral commodities from Australia into key markets. Building strategic partnerships to attract investment Building strategic international partnerships is fundamental for Australia’s critical minerals projects to access global opportunities and contribute to diverse, competitive and resilient supply chains. Foreign investment has always been – and remains – fundamental to Australia’s prosperity. It helps drive economic growth, creates skilled jobs, improves access to overseas markets and enhances productivity. Australia’s domestic demand alone cannot sustain a large critical minerals sector. Attracting international investment and offtake can enable Australian projects to access key markets and create the scale needed to be commercially viable.
Strengthened government-to-government collaboration could increase access to global markets and support emissions reduction efforts. There are many prospective Australian critical minerals projects that could directly support the economic needs of our key trading partners and their efforts to transition to net zero. Australia could benefit from working closely with key like-minded economies such as the US, the United Kingdom (UK), the European Union, Japan, the Republic of Korea and India. Benefits could also be realised by partnering countries with an increasing interest in investing in clean energy technologies, such as key economies in the Indo-Pacific. The increase in demand from our trading partners could create cost-advantages for these projects and allow Australia’s critical minerals sector to mature, particularly as key markets move to increase their investment in clean energy technologies and bolster their manufacturing capabilities. We are seeking views on how Australia could leverage its international partnerships and collaborations to support Australia’s critical minerals projects and contribute to a more diversified global market for clean energy technology. Initiatives to support enhanced international collaboration Strategic agreements with partner governments, government-to business and commercial arrangements may create opportunities that support investment or build critical minerals capability. Austrade is the Australian Government’s lead trade and investment facilitation agency. It supports the critical minerals sector by developing commercial partnerships that connect Australia with our trading partners, which includes facilitating offtake and foreign investment in prospective Australian projects. The Critical Minerals Office provides national policy and strategic advice and facilitates the development of the sector, including by deepening collaboration with key international partners. Several existing bilateral collaborations include: •The Australia-USJoint Net Zero Technology Acceleration Partnership •The Australia-UKJoint Working Group on Critical Minerals •India-AustraliaCritical Minerals Investment Partnershipwhich aims to support Indian investment in Australian critical minerals projects and grow the sector. •The Australia-Republic of KoreaMemorandum of Understanding on Cooperation in Critical Mineral Supply Chains •The Australia-JapanPartnership between Australia’s Department of Industry, Science and Resources and Department of Foreign Affairs and Trade and Japan’s Ministry of Economy, Trade and Industry Concerning Critical Minerals •The Australia-FranceCritical Minerals Dialogue •The Australia-GermanyWorking Group on Raw Materials •Scientific partnerships such as theCritical Minerals Mapping Initiativebetween Geoscience Australia, the US Geological Survey and the Geological Survey of Canada. Australia has an active presence in a range of multilateral fora, including: •TheMinerals Strategic Partnershipwhich aims to bolster critical mineral supply chains essential for the energy transition TheIEA Critical Minerals WorkingPartyto enhance the quality and impact of the IEA’s work on critical minerals with member countries, including Australia •TheConference on Critical Materials and Mineralsto exchange information on policies governing critical materials, R&D, and related efforts •Chairing theStrategic Advisory Group in the International Organization for Standardization (ISO)which has analysed current and potential standardisation work in critical minerals •The Quadrilateral Security Dialogue •The G20. Australia is also a founding partner of the Energy Resource Governance Initiative (ERGI), a US-led initiative which provides tools and technical assistance to countries with developing mineral resources to help establish best practice governance in mining.
SRL Price at posting:
$2.09 Sentiment: Buy Disclosure: Held
(20min delay)